As with most surveys related to trade, I find the approach very frustrating. It ignores key points and doesn't really get at the issues in an effective way.

Here are the three questions they ask:

Question 1: Are you in favor of requiring food sellers to indicate, on the package label, the country of
origin of the fresh meat they sell—that is, where the meat came from originally?

...

Question 2: Animals like cattle and hogs can be born in one country, raised in another country, and
processed in a third country. The U.S. Department of Agriculture is proposing that food sellers be
required to indicate, on the package label, the country or countries where each of these activities takes
place. Do you favor or oppose this required disclosure?

...

Question 3: At present, beef products from animals born and raised in one country and processed in the
U.S. are labeled simply as a product of both countries. The U.S. Department of Agriculture is proposing
that, for meat products from these animals, food sellers be required to indicate, on the package label,
the country or countries where the animal was born and raised, and the fact that the meat was
processed in the U.S. Do you favor or oppose this required disclosure?

The survey respondents were in favor of each of these items, with over 60% favoring "strongly," and over 20% favoring "somewhat."

I have problems with a number of aspects of these questions:

-- The first question talks vaguely about "requiring" origin labelling, but never asks whether people favor a government statute or regulation mandating these things. The other questions refer to USDA proposals, but nonetheless the nature of this as a government mandate is not made clear. As many people probably realize, here in America there is a bit of skepticism about government! If the government's role had been made clear, I can imagine the results might have been very different. I can't think of many issues where almost 90% of Americans think the government should do something!

-- Related to the first issue, there was no discussion of how the market might provide a solution to this. It has been about a year since I've done this, but I used to buy meat at the meat counter at Whole Foods. They labelled their meat, but not in the vague "Product of United States" way that the measure requires. In some cases, they actually told you what farm and what city the meat came from! Now that's useful information. You could look up the farm's web site and learn more about it. By contrast, knowing that the meat came from "the United States" or "Canada" doesn't tell me very much. Those are big places! Arguably, then, the market is already providing a better solution than is the government.

-- Of course, as anyone who has been to Whole Foods knows, there is a cost to all of this information. But that cost applies no matter why the information is being provided (market or government mandate): A government mandate that this information be provided is going to add to the price of the meat, just like it adds to the Whole Foods price. Yet the survey questions never mention that. I wonder how people might have answered if they had been told about the extra costs.

-- Finally, the questions try to sanitize things by referring to information on where the meat was "processed." As I understand the new regulation, though, the label will refer to where the animals were "slaughtered." I remain convinced that many people do not want to see the word "slaughtered" on their package of meat!

So, the survey is interesting. But I'm not sure it really gets at what U.S. consumers want to see in terms of meat labelling.

Boston College law prof Frank Garcia has a new book called "Global Justice and International Economic Law." There's a lot going on in the book, and I can't do a full review here, but I wanted to mention one point he makes: Trade agreements should be based on consent. In this regard, he talks about how a consent approach relates to the substance of trade agreements, that is, what trade rules should be about. (See pp. 322-333) As this blog's readers probably know, the issue of the purpose of trade agreements is something I obsess over, so I'm interested in where the consent idea takes him.

But beyond the issue of the purpose of trade agreements, I'm curious about consent more generally. How can we determine if there has been consent in trade negotiations? Can we just assume that all countries understand their interests and have consented to international agreements that they sign? If not, which countries can be thought of as not having given proper consent? Is the ability to consent based on size and sophistication? Are some countries so big and have such great negotiating resources that no one can be said to have consented in negotiations with them?

This is from a Washington Post article about USDA's revision to its country of origin labeling (COOL) measures, in response to a WTO ruling that the measures violate WTO obligations:

But the regulations, posted Friday by the Department of Agriculture, are the latest move in a trade dispute that has pitted U.S. consumer groups, which favor the labels, against free-trade advocates, who say the regulations are biased against cattle and pork from Canada and Mexico.

So, according to the article, "consumer groups" favor the labels. Ben Beachy of Global Trade Watch goes further in his comment on a post of mine: "90% of the U.S. public ... supports COOL."

I'm curious about what consumers think of all this. I haven't seen any of the consumer surveys; I'd love to hear more about them if anyone knows the details.

If someone is doing surveys of these issues, here's what I'd like to learn more about:

-- Are consumers in favor of origin labelling in the abstract, i.e., they simply state that they would like to know where their meat comes from?

-- Do consumers want government laws that requre origin labelling, or do they simply want companies to provide that information (as some already do)?

-- Did consumers support the COOL measures as they were originally drafted (i.e., the ones the panel and Appellate Body have already examined)? Did they understand how those labelling requirements worked?

-- Do consumers support the new COOL measures that require the provision of information on where animals were "born, raised and slaughtered"?

The American Society of International Law’s International Economic Law Interest Group (ASIL IEcLIG) is pleased to issue a Call for Proposals for its inaugural Junior Scholars Research Forum, to be held at the University of Pennsylvania’s Wharton School, in Philadelphia, on November 22, 2013. This one-day Research Forum will provide junior international economic law scholars with a supportive and constructive environment in which to present and receive feedback on their works-in-progress. Participation in the Forum is by invitation only. IEcLIG is inviting untenured international economic law scholars, including academics in tenure-track or non-tenure track positions, scholars with temporary academic appointments (e.g. VAPs, Fellows) and practitioners looking to enter legal academia in the near future to submit proposals for the Research Forum. Only authors of approved works-in-progress and a select group of established international law scholars will be invited to attend. Participants will present their work to a panel of other junior scholars and to a select group of established international law scholars, and will receive helpful and friendly suggestions on their work. Established scholars in international economic law will be assigned to each paper to provide helpful comments and suggestions. All topics concerning international economic law, (broadly defined to include areas related to but not limited to trade, investment, finance, international intellectual property) will be considered.

Lunch and dinner will be provided. A registration fee of $75.00 is required for ASIL non-members. Becoming an ASIL member is strongly encouraged if you plan to attend this event.

If you are a junior scholar working in the area of International Economic Law and are interested in participating in the Research Forum, please email a title and short abstract (no more than 500 words) detailing the subject of your intended paper, and a current CV to the Co-Chairs of ASIL-IEcLIG, Jason Yackee at jyackee@wisc.edu and Elizabeth Trujillo at etrujillo@suffolk.edu. The selection committee, made up of active scholars in international economic law, will review the submissions by blind review. Please do not include your name on the submission, but please do include an email so we can contact you. The deadline for receipt of proposals is June 25th, 2013. Invited participants must be committed to circulating a full draft paper to the Forum organizers at least three weeks prior to the Research Forum.

Unfortunately, the IEcLIG budget does not allow for any travel or other financial assistance for participants. The IEcLIG leadership will make its selection decisions by July 25th, 2013 and authors of selected proposals will be contacted by that date.

The latest WTO complaint, on various EU measures related to the biodiesel industry, is now available here: http://www.worldtradelaw.net/cr/ds459-1(cr).pdf There are some complicated measures involved, and I don't claim to fully understand it all yet. Here are some excerpts:

The measures referred to in this Part establish sustainability criteria with which biofuels13
and bioliquids must comply in order to be taken into account when measuring compliance with
the targets of the EU Member States in the field of renewable energy and in order that these
biofuels and bioliquids may benefit from the incentives for their use.

In order to be considered sustainable, biofuels and bioliquids must, among other criteria,
result in the saving of at least 35% of greenhouse gas emissions with respect to fossil fuels.14

Argentina does not object either to the use of sustainability criteria or to a methodology
by which greenhouse gas emissions savings are calculated. In fact, the biodiesel sector
of Argentina stands out due to its environmental and social sustainability. The efficiency
of its integrated production facilities, their proximity to areas where the feedstock is grown and
to deepwater ports results in significant greenhouse gas savings. However, Argentina considers
that the above-mentioned threshold of 35% is arbitrary, and appears neither to be scientifically
justified nor to be based on a recognized international norm or standard.

The default value assigned by these measures to soybean biodiesel is 31%. This implies that
soybean biodiesel produced in Argentina cannot comply with the criteria for the reduction of the
greenhouse gas emissions to be considered sustainable on the basis of the default value.

And:

According to these measures, any petroleum company that releases fuels and/or diesel
products for consumption also has to release for consumption certain amounts of sustainable
biofuels. These measures establish that only biofuels produced in the EU can be considered
as "sustainable biofuels". However, since biodiesel produced in Argentina is not considered
as "sustainable biofuel", it can neither be considered for the purposes of the incorporation
obligation laid down in these measures, nor can it benefit from the excise duty reduction provided
for therein.

These measures also provide that a reduced excise duty rate is applied to diesel which
contains a certain percentage of fatty acid methyl ester falling within CN code 3824 90 99 (FAME) produced in production units which have been approved by the customs and excise duty
administration. According to these measures, only production units that are located in the territory
of an EU Member State can receive such approval.

The European Commission decided today to ask the Member States for their agreement on a mandate to open negotiations on an investment agreement with China. This is the first ever proposal for a stand-alone investment agreement since foreign direct investment became the exclusive competence of the EU under the Lisbon Treaty.

The WTO’s Appellate Body ruled that the program’s requirement that meat producers gather a greater amount of information about meat origins than is ultimately conveyed to consumers downstream violated WTO requirements. To address this concern, USDA’s new rule will offer consumers more precise labels that specify the country in which each step in the meat production process occurred. The change will better fulfill COOL’s policy objective and consumers’ rising demand for greater transparency regarding the production of their food, ...

So, the upshot is, in Global Trade Watch's view, the WTO ruling has led to a better, more consumer-friendly domestic regulation.

The issue of trade in lethal injection drugs came up a while ago in relation to U.S. excecutions. But we are not the only executioner around, and similar issues have now arisen in Viet Nam:

Vietnam has issued a new law allowing domestically produced chemicals to be used in lethal injections, a change that should enable it to resume the currently stalled executions of more than 530 people on death row.

The holdup was a result of a European Union ban on its factories exporting chemicals used in lethal injections. The ban was issued because the EU regards capital punishment as a human rights violation.

It has left Vietnam unable to execute a prisoner since November 2011, when the country decided to switch from firing squads to lethal injections on humanitarian grounds.

Vietnam's old law governing executions stipulated the names of the three chemicals produced in the EU that had to be used in lethal injection. The new law issued this week doesn't mention the chemicals by name, meaning local versions can be produced and used. The law will take effect on June 27.

In an interview earlier this year, European Union ambassador to Vietnam Franz Jessen said Vietnam might not have realised the practical implications of changing to lethal injections when it announced its plan to switch from the firing squad. He said the EU had hoped difficulties in sourcing the chemicals might have triggered a moratorium on the death penalty in the country.

Some trade law thoughts that occur to me:

-- If I understand the old law correctly, it seems that it might have constituted de facto discrimination in favor of EU products. The new law has removed that discrimination.

-- Then there's the EU export ban, which would violate GATT Article XI, but almost certainly be justified under Article XX.

-- I wonder what the "local versions" will be. If there are patents involved, will there be TRIPS objections raised?

I've always thought that the importance of production and process methods for the analysis of WTO rules is greatly overstated, but I recognize that others find it relevant, or at least interesting. Hence, I feel obligated to point to the following statement by the AB in para. 5.63 of the Renewable Energy case in the context of GATT Article III:8(a):

What constitutes a competitive
relationship between products may require consideration of inputs and processes of production
used to produce the product.

Some EU member states are also concerned that a procedure included in the mandate to allow for resolving disputes between investors and states.

While such dispute mechanisms are increasingly common in free trade agreements, some EU diplomats say they are not necessary for two parties with strong legal systems already. EU countries have worried it could result in excessive lawsuits challenging national regulations.

The updated [EU draft negotiating mandate] includes language designed to calm such fears.

The reason governments choose to support the development of renewables is
not primarily because of concerns regarding the adequacy and affordability of
supply. Rather it is because lower emissions sources of energy, such as
renewables, confer a positive benefit to society that is not normally captured by
market arrangements absent some specific form of government intervention. In
such circumstances, economists speak of market failure as a result of
externalities. One way to address this externality is by subsidising the production
of energy from renewable sources. FIT schemes are one example of such
subsidies. The benefit of the subsidy accrues to the producers of energy from
renewable sources. In the absence of such a benefit there would be no incentive
for them to invest. The public benefit to society from lower emissions is entirely
predicated on there being a private benefit to the producers of energy from
renewable sources. These private benefits take the form of fixed prices over a
lengthy period of time representing a significant mitigation of investment risk –
more so than would likely be available on commercial terms, and more than
made available under contracts between government and private investors.

With Simon's permission, I wanted to let you know about two calls for candidates we have in Geneva:

1. A 50% job, to help me run and supervise the Trade & Investment Law Clinic at the Graduate Institute, and to set up a new, related internet platform www.tradelab.org (Trade & Investment Legal Advisory Broker).

2. Funding for Phd students / junior researchers (less than 5 years of research, including Phd research time), to spend 3 months to 1.5 years in Geneva (anywhere between summer 2013 and spring 2015) as a paid www.dissettle.org fellow. This allows you to work on, and receive training in, how to make better use of economics in international trade or investment disputes.

I've done several posts related to the Canada - Renewable Energy AB reasoning on "benefit." As I noted, there is some uncertainty as to the potential scope of the ruling. How much leeway do governments now have to provide finanical contributions in a way that "creates a market" without leading to a finding of "benefit"? It will take some more cases to work this all out.

This may come through WTO subsidy disputes, of course. But perhaps the developments will also come through CVD cases? There are more CVD cases than WTO subsidy cases. Will respondents and their governments try to come up with creative arguments in CVD proceedings to the effect that the financial contributions at issue do not result in a "benefit" under the AB's Renewable Energy reasoning, and thus do not constitute a subsidy? It seems like it's worth a shot. Perhaps this will provide the first opportunity to explore the AB's reasoning.

The Sandra Day O'Connor College of Law seeks a dynamic, proactive, and highly-motivated individual for the position of Director of the Center for Law and Global Affairs. The Director will report to the Dean of the College and will work daily under the direction of the Faculty Director(s) of the Center. The successful candidate will be responsible for advancing the vision of the Center as established by the Center faculty and the Faculty Director(s) and ensuring that vision fits within the larger vision of the College of Law. The Director will be responsible for managing the Center's budget and fund-raising efforts as well as coordinating Center events, conferences, and speakers. The Director will also be responsible for coordinating student participation in the Center and facilitating student engagement in international and transnational legal work.

The WSJ has a strange article on Roberto Azevedo's selection as DG. It starts:

A depressing rule of international institutions is that whatever their founding intentions they inevitably evolve to serve themselves or their worst members more than their original cause. The latest example is the World Trade Organization, which began as a rule-making body to promote free trade and has drifted toward protectionism when it isn't useless.

The WTO has drifted towards protectionism? That seems like it was written by someone who is unfamiliar with the WTO.

The Washington Post has an excellent article on the WTO Tuna-Dolphin dispute, stripped of legal jargon and very informative. An excerpt:

There is no sure way to catch tuna without harming other marine life. Dolphins, as well as sharks, turtles and other animals, are unintentionally killed as bycatch in the quest for tuna.

The central question facing governments, corporations, environmentalists and consumers is how much is too much, and whether using a huge net to catch tuna in one part of the ocean is any worse than using them to catch it in other parts.

For those of you who want to hear more about the EU case related to the seal products ban, Laurens Ankersmit has the details at the European Law Blog. Here's an excerpt:

In a second round of cases in Luxembourg, a number of seal hunters failed (yet again) to convince the General Court to annul the EU-wide ban on trade in seal products. In a nutshell, the seal hunters argued that the EU acted ultra vires by adopting the ban on the basis of article 114 TFEU (harmonization of rules for the establishment and functioning of the internal market). Moreover, the applicants argued that the ban violated their fundamental rights and the principles of subsidiarity and proportionality. According to the applicants, the EU-wide ban was not aimed at improving the functioning of the internal market, but rather at safeguarding the welfare of animals, an objective for which no legal basis exists within the EU Treaties.

In dismissing the arguments put forward by the seal hunters, the General Court made a number of interesting statements regarding the EU’s ability to severely restrict trade of an ‘exotic import’ (a product not made within the EU) within the EU’s internal market on grounds of protecting the welfare of animals living outside the EU. In this post I will focus on the competence issue by discussing the particularities of EU constitutional law and the (modest) challenge a ban on the sale of exotic imports such as seal products poses for EU legislative competence.

5.174. In the present disputes, supply-side factors suggest that windpower and solar PV
producers of electricity cannot compete with other electricity producers because of differences in
cost structures and operating costs and characteristics. Windpower and solar PV technologies have
very high capital costs (as compared to other generation technologies), very low operating costs,
and fewer, if any, economies of scale. ...

...

5.178. In our view, not only should the Panel have defined the relevant market at the outset of its
benefit analysis, but, in its analysis of the relevant market, it should also have considered that in
Ontario the government definition of the energy supply-mix for electricity shapes the markets in
which generators of electricity through different technologies compete. We recall that Canada had
argued before the Panel that the relevant market for the purpose of the benchmark analysis
should be the market for electricity produced from windpower or solar PV technology. Had the
Panel more thoroughly scrutinized supply-side factors, it would have come to the conclusion that,
even if demand-side factors weigh in favour of defining the relevant market as a single market for
electricity generated from all sources of energy, supply-side factors suggest that important
differences in cost structures and operating costs and characteristics among generating
technologies prevent the very existence of windpower and solar PV generation, absent government
definition of the energy supply-mix of electricity generation technologies. This, in turn, would have
lead the Panel to conclude that the benefit comparison under Article 1.1(b) should not be
conducted within the competitive wholesale electricity market as a whole, but within competitive
markets for wind- and solar PV-generated electricity, which are created by the government
definition of the energy supply-mix.

I take the AB to be saying that because the costs of solar- and wind-produced electricity are higher than for other forms of electricity, solar and wind electricity must be considered a separate market from wholesale electricity more broadly.

But is that right? Are solar and wind a separate market, or are they simply uncompetitive products in the electricity market?

I can imagine that supply-side factors would sometimes be relevant for market definition in the antitrust/competition policy context, but I'm not sure how well this approach translates to the SCM "benefit" context. It may be that the role of market definition is different in each. In the SCM context, the issue is the terms on which a financial contribution was provided, rather than a determination of all the players in the industry for antitrust analysis purposes. (I'd be curious to hear the views of any antitrust/competition policy experts out there).

The Academy of International Investment and
Trade
Law, based in Macau and organized
by the Institute of European Studies of Macau since, aims at providing education and training at the highest
international standard on the law of international trade, the WTO and selected
issues of regional integration regimes such as the NAFTA, EU, Mercosur and
ASEAN. The course takes place during two weeks in July and follows a model similar to the Academy of European
Law, in Florence, and to the Academy of International Law, in The Hague.
Its teachers are invited from the leading experts in the world. The Academy
fills a gap in international legal education and, although especially devised
for governmental staff, particularly in Asian countries, it also provides a
unique opportunity of high-level trainingin the law of international trade and investment to young scholars and
lawyers at large.

I'll be blogging more in the coming days about the exciting possibilities opened up by Roberto Azevedo's ascent to the leadership of the WTO. This doesn't mean that I have forgotten the procedural corruption that led to the elimination of the African candidates in the first round. Azevedo saved the WTO from a disastrous failure of legitimacy because, quite bluntly, he ran a clean, honest, respectful campaign-no one can pin on him the process irregularities (Jonathan Fried may have a lot to answer for) or other strong-arm tactics. Unlike Blanco, Azevedo did not benefit from stories planted in the press(as Bob Dylan would have it) against his opponent. Selecting a clean man was the only way of getting an acceptable result from an originally unclean process.

Among the best guides to Azevedo's views is the ICTSD e-book collection of questions and answers of DG candidates. One of Azevedo's responses there on climate change will be of interest to WTO lawyers. Azevedo suggests that evolutionary interpretation of WTO law may well be able to address the climate challenge, citing the Shrimp/Turtle case. Compare this to the atavistic approach of Pascal Lamy in a 2008 speech on climate and trade, where he lectured the audience that well, after all, Shrimp/Turtle is only about shrimps and turtles! (and he went on to misread the case anyhow, suggesting that it stood for a self-standing requirement to negotiate as a precondition to unilateral measures, which the AB made clear in its 21.5 ruling was not the case, and even clearer in US-Gambling, when interpreting the GATS equivalent of Article XX).

To link up with Simon's last post, one might ask whether the approach by the AB to "benefit" in the Canada-Renewable Energy case is the kind of evolutionary interpretation that Azevedo had in mind when talking to ICTSD about climate.

I'm still puzzling over the Appellate Body's reasoning on "benefit" under SCM Agreement Article 1.1(b) in the Renewable Energy/Feed-In Tariff case, mentioned in the last post (Luca Rubini is doing the same thing in his comment to the post). Very briefly, the AB seems to say that if the government "creates a market," rather than just intervenes in an existing market, you can't simply assume that a financial contribution confers a benefit. Rather, you have to find an appropriate benchmark that comes from -- and here I'm a little unsure about things -- a similar situation: "an
appropriate benefit benchmark for windpower and solar PV electricity generation in Ontario should
be one that, within the parameters of the Government of Ontario's definition of the energy supply-mix, reflects what a market benchmark would yield for wind- and solar PV-generated electricity." (Para. 5.227) In other words, find a similarly distorted market, and compare your situation to that situation. If your situation is more distorted than other distorted markets, than there is a benefit. If it's not, there is no benefit.

I'm not sure that's exactly right, but it may be something along those lines.

Part of the reason this case is so difficult to follow is that electricity markets are absurdly complicated. I thought it might help to put forward two examples of similar issues using more familiar products.

First, let's say that governments are worried about the polluting effects of coal, and they hope to develop natural gas as an alternative. They also want to ensure a long-term supply of energy. They recognize that there is lots of shale gas out there, which would help with these goals, but unfortunately it's hard to get to it. It's too expensive and thus there is no market for it. So, a government subsidizes research on techniques to extract it. The research pays off, and now there's a booming market for shale gas. Would it be said that the government created this market? In that situation, how would the AB's test be applied to determine whether a benefit has been conferred? What is the benchmark? If other governments have offered subsidies, do you compare this government's subsidies to other governments' subsidies? If no other government has offered subsidies, what is the benchmark for comparison?

For the second example, let's say a government wants to end reliance of fossil fuels, so it decides to promote battery-powered cars. But there's no market for them; they are too expensive. So the government offers tax credits to consumers who purchase these cars, thus creating a market. How would the AB's test apply here? What is the benchmark? Do you compare this government's tax credits to those of other governments? What if no other government offered tax credits?

The AB report in Canada - Renewable Energy/Feed-In Tariffs has been circulated. There's a lot to digest in the reasoning on "benefit," and I've only just skimmed it, but my impression is that they have tried to provide some flexibility under the SCM Agreement to governments who want to promote clean energy. Here's a key passage:

5.188. Nevertheless, a distinction should be drawn between, on the one hand, government
interventions that create markets that would otherwise not exist and, on the other hand, other
types of government interventions in support of certain players in markets that already exist, or to
correct market distortions therein. Where a government creates a market, it cannot be said that
the government intervention distorts the market, as there would not be a market if the
government had not created it. While the creation of markets by a government does not in and of
itself give rise to subsidies within the meaning of the SCM Agreement, government interventions in
existing markets may amount to subsidies when they take the form of a financial contribution, or
income or price support, and confer a benefit to specific enterprises or industries.

5.189. We further note that a comparison between renewable energy electricity generators and
conventional energy electricity generators requires consideration of the full costs associated with
the generation of electricity. In this respect, if, on the one hand, higher prices for renewable
electricity have certain positive externalities, such as guaranteeing long-term supply and
addressing environmental concerns, on the other hand, lower prices for non-renewable electricity
generation have certain negative externalities, such as the adverse impact on human health and
the environment of fossil fuel energy emissions and nuclear waste disposal. Considerations related
to these externalities will often underlie a government definition of the energy supply-mix and thus
be the reason why governments intervene to create markets for renewable electricity generation.
On this point, we agree with the Panel's statement that, where government intervention that
internalizes social costs and benefits is limited to defining the broad parameters of the market,
"significant scope will remain for private actors to operate within those parameters on the basis of
commercial considerations".

5.190. In the light of the above, and in particular in view of the fact that the government's
definition of the energy supply-mix for electricity generation does not in and of itself constitute a
subsidy, we believe that benefit benchmarks for wind- and solar PV-generated electricity should be
found in the markets for wind- and solar PV-generated electricity that result from the supply-mix
definition. Thus, where the government has defined an energy supply-mix that includes windpower
and solar PV electricity generation technologies, as in the present disputes, a benchmark comparison for purposes of a benefit analysis for windpower and solar PV electricity generation
should be with the terms and conditions that would be available under market-based conditions for
each of these technologies, taking the supply-mix as a given.

How big will this government creating a market "exception" be? Will governments look for opportunities to use it to make financial contributions in a way that does not confer a benefit? What other goods that might not exist in a market could governments act to create?

Thanks again to Rob for all of his posts on the Seal Products hearing. Maybe some day WTO hearings will get press coverage that is as extensive as U.S. Supreme Court hearings, but for now that is not the case, so it was nice to have access to Rob's detailed reporting and commentary.

Along the lines of some of the issues in Seal Products, this is from a WTO report by a panel of experts convened by Pascal Lamy, on "Defining the Future of Trade":

Principles are the foundation of the system

We focus on three areas where principles defining the system are crucial. These relate to
non-discrimination, transparency and the relationship between flexibility and reciprocity. ...

....

Non-discrimination: managing non-tariff measures

As mentioned in Chapter 2, the topography of trade barriers is changing. With the
reduction in tariffs, NTMs naturally attract more attention. While we urge vigilance as to the manner in which they are designed and used from a trade perspective, we also
recognize that NTMs are here to stay. Where they serve public policy objectives, the issue
is not elimination. Rather, we must manage them appropriately in relation to their effects
on trade.

Regulations in key areas of the economy, such as health, safety, environmental quality
and labour rights are not set in the WTO. What this means is that the WTO must consider
how to articulate the relationship between trade opening and the existence of measures
outside its remit that are nevertheless relevant to the conditions under which trade takes
place. While a convergence of public policy design would facilitate matters from a purely
trade perspective, we recognise that respect for differing social preferences is paramount.
We must work towards a shared understanding of what constitutes a level playing field. As
a matter of principle, we argue that the discriminatory application of NTMs must be avoided
where possible and that members should not restrict trade where this is not essential to
the pursuit of public policy objectives. Capacity-building and technical assistance should
also be available to help developing countries in this area of policy.

There are two parts to this that intrigue me.

First, my sense is that particular words become sensitive over time. Just like "aim and effect" became very controversial a while back, and people came up with new words to reflect similar ideas, there is a lot of nervousness about the word "necessary." So here we have a substitute word, "essential": "members should not restrict trade where this is not essential to the pursuit of public policy objectives." The specific word choices dealing with the connection between measures and their goals are important. Does a measure need to be "related to," "necessary for", "essential to"? At some point, I would love to see one of these expert panels that come around every few years get into the weeds and discuss the nuances of the different options.

Second, there's the issue of how non-discrimination as a principle relates to these concepts. Here, the panel starts off by saying the principle it is discussing is "non-discrimination." Then it elaborates, "the discriminatory application of NTMs must be avoided where possible." So that's all clear. Discrimination is not allowed.

But that's not the end of the sentence. The panel then adds the part mentioned earlier: "members should not restrict trade where this is not essential to the pursuit of public policy objectives." Does the panel think this is another way to state the non-discrimination principle? After all, this is all being said under the general heading of non-discrimination. Or is this an additional principle, going beyond non-discrimination?

People tend to gloss over these issues, but one of my goals is to highlight them and get people to talk about them. So, feel free to talk about this in the comments!

Cuba notified the WTO Secretariat, on 3 May 2013, of a request for consultations with Australia on the Australian Tobacco Plain Packaging Act of 2011 that regulates the appearance and form of retail packaging used in connection with sales of cigars, cigarettes and other tobacco products.

From what I can see (and somebody please correct me if I'm wrong), this is the first Cuban GATT/WTO complaint since this one back in 1982.

Some of the panelists had difficulty understanding how permitting for-profit or fully commercial sealing under the indigenous or marine management exceptions would undermine the public morals or animal welfare objectives of the EU. I find this baffling: it is very easy to see why people would be more outraged or upset at the suffering of animals when it would not occur but for the profit motivations of private industry, as opposed to for some necessary or legitimate public purpose. The EU already restricts animal tested cosmetics but is no so restrictive of testing on animals when it comes to developing life-saving medications. That corresponds to very widespread moral intutitions that commercial exploitation of animal suffering is different from suffering which occurs for other important human purposes, even though it can lead to profit taking (such as the profitable sale of an animal-tested wonder drug). The panel also seemed to find it hard to grasp why if for-profit or commercial activity were permitted under the exceptions, there would be incentives to circumvent the ban, for example simply choosing ethnically indigenous people to run a commercial hunt (whereas the idea of the exception is to preserve a traditional way of life, not an open-ended affirmative action program for any person of indigenous ancestry). Finally the panel did not seem to grasp the meaning of the footage that was shown to it at the beginning of the day; commercial hunters unlike non-commercial indigenous and marine management hunters, depend for a living on immobilizing as many seals as possible as quickly as possible-there need for seals is not intrinsically limited by these other purposes (like meat for their own table, and their dogs) but rather every extra seal means extra profit. It is the economics of the commercial seal industry that are incompatible with methods that involve monitoring each seal from the first striking of the seal until one is sure that it is quickly, and as painlessly as possible, dead. This is the tragic conflict between commercial sealing and what in an ideal world would be best practices in terms of humane killing. (Of course, aboriginal hunters use methods that are humane, because of the necessities they are under; but the other side of the coin is that they don't have the incentive to take as many seals as possible within a very short period of time, which is an important limit on their inhumaneness).

Now from tragedy to comedy. The most hilarious red herring was introduced by the Chair of the panel who said he had heard a report that seal hunting was occuring on or in the waters of the French overseas territories of St Pierre and Miquelon. Now evidence was one of my lowest grades in law school, but am I wrong that there is something questionable about a judge introducing evidence of his own in a proceding on the last day, without it being in the record? Whatever report it was, didn't even seem to be distributed to the parties. Nor in any of the publically available or leaked pleadings that I have seen were there any facts related to St. Pierre and Miquelon. But merely by introducing this as some kind of shocker or smoking gun, the chair of the panel appeared to have misunderstood the EU measure as a ban on hunting not the placement of seal products on the EU market-it is really very difficult to see how the existence of hunting in St. Pierre and Miquelon could possibly be relevant to the actual measure before the panel (unless seals products made from St. Pierre and Miquelon seals were being exempted from the EU general ban, which nobody was suggesting). Eventually, the panel was informed that St. Pierre and Miquelon were among those French overseas territories to which the European Union treaties don't apply (if I understood correctly). But this was not the only case where the chair appeared to misunderstand the EU measure as a regulation on hunting rather than the placement of products ultimately derive from hunting on the EU market.

The Singapore panelist asked the parties whether they thought TBT applied to PPM characteristics of a product that were not embedded in the product physically. Was this question just intended as a test of how well the attorneys knew the Tuna/Dolphin case, where she was a panelist (and where majority decided that TBT did apply to the US measure, despite dolphin friendliness being a non-physically embedded characteristic)? Or is it a giveaway sign that she was indeed the dissenting panelist who didn't have to get to that question, because she (rightly in my view) found that the US measure did not mandate any product characteristics as such? In any case, the AB has upheld the decision of the panel in Tuna/Dolphin that TBT is applicable to the US measure, and this means it had to uphold the finidng that that product-related PPMs within the meaning of TBT include PPMs based on characteristics that do not affect the physical nature of the traded product.

Norway quickly gave an answer that was glib, which was that there is no need to decide the question because the EU ban simply mandates of products that they not have the obviously physical characteristic of containing seal. Not so fast. Because Norway itself has emphasized obsessively the exceptions to the ban, and these exceptions are based on non-physically embedded characteristics of the seal product, such as whether the product is derived from certain kinds of indigenous or marine management hunts. In any case, as noted, the AB has already determined the issue. So why use up precious time talking about it in the last hours of the hearing?

Finally, it became clear under questioning that Canada didn't have much of a detailed notion of the less-trade restrictive alternative it was proposing that the EU could adopt to achieve the same level of protection or higher. This appears to be some kind of negotiated certification and labeling scheme that would allow into the EU seal products where certified as coming from seals hunted in a manner that meets humane standards. It was insisted there were other real world examples examples where the specific hunt where one could trace the hunt from which a particular product is actually derived. But, as many experts have insisted, the geographic and climatic conditions under which the Canadian commercial hunt is conducted would make monitoring and verification of the hunting practices on an ongoing basis difficult if not impossibly dangerous and insecure. That's a different problem than tracking. Not surprising that the OIE (the international animal health organization) didn't go down the road of humane hunting standards once it received an expert report detailing the extreme obstacles to effective monitoring and enforcement.

Returning to New York City, some of the darkness lifts. Good to read that Delaware's senate, following New York's the week before the Seals hearings, has passed a shark's fin ban. This evening, at NYU law, we host John Ruggie, speaking about his new book on corporate social responsibility. The Seals hearing begins to seem like a nighmare from which I have suddenly awakened.

Still I promised a blow-by-blow of the second day, and here it is (without repeating all of what was in the last two posts).

The day began with the Chair of the panel pushing hard on the comparison between the indigenous Greenland hunt and the non-indigenous Canadian and Norweigian hunts. The EU explained that the main purpose of the Greenland hunt is the pursuit of a traditional way of life, where seal products are part of the diet, and even the food for the sled dogs inseparable from that way of life. The Chair kept coming back to the apparent lack of evidence about animal welfare outcomes in Greenland, as if assumptions about a lack of animal welfare concerns were the reason why the EU had not banned products from that hunt. The EU had to explain, again as it did repeatedly in the hearing, that the reason that the Greenland hunt was permitted was that it was a traditional indigenous hunt, and that the EU had decided that to the extent that some of the hunting practices the indigenous people there had to use were not consistent with animal welfare, that indigenous rights must prevail. Here the exchanges kept circling back to the apparent incapacity of the Chair to understand that one can have two objectives and make a decision to sacrifice some of the fulfilment of the one in other to advance the other objective. If THAT is contrary to WTO law, then so is most legislation in most liberal democracies to the extent that it affects trade.

The Chair went on to summarize his thinking on the case, saying very kind things about the Canadian and Norweigian hunts, as integrating animal welfare and natural resource preservation, while all the while moving toward a more humane hunt. Before all the oral pleadings on facts and law had been made, he was essentially telling the EU they had lost their case. It was like a judge saying: ok, I'm going to find you guilty, is there anything you can say on your behalf before I pronounce the sentence. (I wonder if there could be a DSU 13 11 objective assessment challenge here on appeal).

There then followed a question from the Australian panelist, which ultimately provoked one of the most shocking moments in the hearings about which I've already blogged. She questioned whether Canada and Norway had correctly identified the measure in its Request for a Panel, since when she looked at the EU scheme she couldn't find an import ban as such. Norway responded that as far as its request went, there was no due process issue because, in referring to a prohibition with exceptions, Norway's description was adequate to identify the measure being complained of. I actually think that the Australian panelist was driving at a different issue than the adequacy of the Panel Request under DSU 6.2. But Norway's (mis-) interpretation of her concern, led to the outlandishly ignorant mistake I've already blogged, the Chair claiming that once the DSU has established a panel, any defects in the Panel Requests are of purely academic interest.

But, as I say, I suspect the Australian panelist was concerned with other matters, in particular with how one could claim a violation of Article XI if the measure itself is not a prohibition or restriction on imports. Perhaps also with whether and to what aspects of the measure the TBT Agreement applies. The EU gave a very clear explanation: the EU measure prohibits, with certain exceptions, the placing on the EU market of seal products (whether imports or internal), while this prohibition is enforced at the border in the case of imports. In other words, this is exactly the kind of measure that, pursuant to the Note Ad Article III, is to be considered under Article III National Treatment not Article XI Quantitative Restrictions (as the panel made clear in EC-Asbestos in a finding that was adopted).

The Australian judge then kept hammering away on underinclusiveness concerns. Why was transit through the EU consistent with public morals, but not consumption by EU consumers of seal products? The basic confusion here is really one sown by Norway's attorney: only a fanatical moral rule qualifies as a "public moral"-so, for example, the prohibition on taking of human life isn't really a moral rule if the criminal law permits a necessity or legitimate self-defense excuse or justification, or euthanasia, or abortion, or capital punishment.

But WTO law allows a Member to determine not only an objective but its level of protection in relation to that objective, and as well, only requires Article XX that a measure make a material contribution to the objective or TBT 2.2 some contribution. The moral beliefs of Europeans could be such that they find facilitating the consumption by non-Europeans of seal products itself to be unacceptable complicity with animal cruelty. But even it that were the case, they might be more concerned with the consumption of seal products by their own fellow-citizens. The contributon to the public morals objective might thus be calibrated with other legitimate concerns, like comity, extraterritoriality, and limited monitoring and enforcement resources. This is why, wisely, WTO law does not put in issue a Member's objective just because, in part due to other objectives (or other considerations that may fall within the same object, such as public morals), a Member decides to take a measure that only fulfills that objective to a limited extent. And the extent is really a sovereign choice. The Australian judge's concern with consistency would logically suggest that the EU could only act on pubic morals concerning cruelty to seals through trade-related measures, if it were to ban all trade with all countries where seal meat is produced or consumed. This relates to another reality from which the panel seems utterly removed: obviously in a given society there can be genuine fundamental moral beliefs but the degree of intensity of those beliefs, and what is adequate in the way of responding them through government regulation, will differ from citizen to citizen. I'm sure that you can find a few people in the EU who would like it if there were drone attacks on Canadian sealing vessels, and of course there are some at the other end of the spectrum who probably even think that Canada goes far enough in preventing cruelty and that nothing be done. The kind of approach to which the panel is inclined with respect to public morals, or at least Norway is urging them towards, would allow a non-democratic regime to stipulate a moral objective as that of an entire society (like China was able to do in the Publications case) but it would make it impossible or next to impossible for a liberal democracy to regulate based on a consensus that reflects a compromise between citizens with varying intensities of moral belief. Truly perverse. The remarkable degree of consensus in the European Parliament, between elected representatives of som any diverse societies, reflects the ability of liberal democracies to vindicate public morality while respecting pluralism in the extent or intensity of moral belief through compromise and calibration of the regulations in question. This what Norway perjoratively characterized throughout the two days as "cherrypicking" or "inconsistency" or complete incoherence.

The Australian and the Singaporean judtge pressed on with the line that the EU seemed to be completely sacrificing animal welfare in the case of the indigenous hunt exception. Could the EU not impose minimal animal welfare standards as a condition for allowing indigenous hunt seal products? The EU pointed out that there are large exceptions to Canada's own animal welfare laws for the indigenous hunt and that general animal welfare laws of the Member states would still likely apply to such hunts. The EU also rightly repeated the hard reality that the traditional way of life of the indigenous peoples in question basically makes a supervised humane hunt impossible. And I would simply add that there is nothing in WTO Law that prevents a Member from limiting its contribution to its objective (public morals, animal welfare here) in order to achieve another objective (indigenous rights). There is no case law that says that a Member has to have a measure that contributes to the maximum extent possible to goals A and B, such that when it pursues C, it must minimize the extent to which pursuing C limits or reduces its contribution to achieving A and B. This is especially true with the Seals measure, where A, the public morality of the European Union's citizens includes, or overlaps with, both B and C.

When it came to the sustainable marine management exception, ironically, the panel looked with suspicion on the limitation of the exception to "small scale" hunting. Ironically, because as the EU explained, besides anti-circumvention (trying to use a cull as a pretext or cover for the kind of commercial sealing that the EU's public morality cannot countenance), the limitation of the marine management hunts to a small scale reduces the number of seals killed even while contributing to the marine management. Here the EU has struck a different balance than with the indigenous hunts: the contribution to the marine management objective is limited by the concern to protect the contribution to the public morals and animal welfare objections. Again, there is nothing in WTO law that goes against such balancing.

Amazingly, the panel didn't really understand the point so there was a follow up question as to whether the EU considered that the quanity of seals killed mattered to public morals apart whether they were killed cruelly or not. With infinite patience, the EU explained the painful arithmitic: since inevitably a significant percentage of seals killed in any hunt will be killed inhumanely, there will be a lot more suffering from inhumane killing if a group of 1000 rather than 100 seals are killed. The kind of moral obtuseness shown in this hearing just boggles the mind. Don't the basic moral sensitivies of human beings display particular horror and indignation at humanly-inflicted suffering on a relatively large scale?

In questioning the non-profit dimension of the sustainable marine management exception, the Australian panelist returned to the moral absolutist or moral fanaticism line. She rightly noted that when seals are killed for marine management purposes, they are killed because they interfere with profit-making fisheries. So why is indirect profit from the suffering of seals okay, but not direct? Of course, that just goes to the intensity of authentic moral beliefs. Since the seal hunt cross-subsidizes in Canada other fisheries (by providing some of the income that allows the fishers to remain in operation and not move to Toronto, etc), one could ban other fish products from Canada, in the sense that these other fishers profit from the seal hunt (and indeed some activists have called for boycotts of restaurants that serve such products along these lines). But why can't the equilibrium point of intensity of moral beliefs across Europe, as determined by its representative institution, the European Parliament, be set at finding indirect profit acceptable and direct profit not acceptable? What case law of the Appellate Body could be pointed to, what text of any relevant WTO Agreement, to suggest that WTO Members surrender their right through legitimate public institutions, to determine the equilbrium point of intensity to which moral beliefs are reflected in regulatory action? More soon, have to prepare for class.